Ulster Business

| 15.1°C Belfast

‘Firms want a lighter touch with NI Protocol… but they have moved onto issues of 2022’

As Northern Ireland remains in a post-election political deadlock, with Prime Minister Boris Johnson now saying the Protocol will remain but be amended, John Mulgrew speaks to Manufacturing NI chief executive Stephen Kelly about what the sector is now prioritising in 2022, why business continues to be strong across the sector, why we need a government up-and-running and why businesses aren’t seeing the same thing are some of our politicians


Stephen Kelly

Stephen Kelly

Photo: Stephen Latimer

Stephen Kelly

‘The impression I get is the NI Protocol was a problem in 2021, but companies are dealing the issues of 2022 now,’ Stephen Kelly of Manufacturing NI tells me.

We now find ourselves in an odd situation, one in which we hear something of a booming voice putting some in an invidious position.

Calls for the scrapping of the NI Protocol continue from some, leading to an unwillingness to form a working Executive with the newly elected Assembly, until issues are dealt with.

And while manufacturing has had to deal with challenges brought forward by the NI Protocol, it has dealt with many of the issues and pivoted.

According to Stephen Kelly, the few issues that truly do remain exist with the GB supply chain – many unwilling or wishing to avoid the complexities or any increased costs in working with Northern Ireland firms.

It comes following Manufacturing Month – a time to showcase the best of the sector, with around 150 top leaders flocking to Galgorm Resort & Spa outside Ballymena for this year’s summit.

But Stephen says the Protocol is far from the leading issue on the agenda for its members and the wider economy.

Weekly Business Digest

Margaret Canning’s selection of the must-read business stories straight to your inbox every Tuesday morning

This field is required

“The surprising thing for me is the NI Protocol was not really mentioned at all,” he says.

“Covid has shifted things. People recognise that they need to be there, with other leaders, be inspired and challenged in terms of their own leadership. That was the big message. They are moving into a different place.

“The event challenged them around business strategy but also the need to think differently. That was quite enlightening.

“It’s about how you become more productive as a business, how you digitise and modernise your business, learning from people who have been on this journey.”

He says, backed by its recent survey alongside Tughans and carried out by Perceptive Insight, the majority of firms here are “getting on and making the most of it” in terms of adapting to the arrangements the Protocol has introduced.

“(Many are saying) ‘my phone is still ringing and ringing off the hook and I can’t meet demand’. As long as the orders keep coming through the front door, those things behind it are not as important.

“The critical thing is that sales are incredibly strong.”

He said one reference to Brexit and the NI Protocol during the recent summit centred around a large business changing how they operate, and pivoting.

That’s something which firms such as Hannon Transport have done, moving away from their GB business and focusing on the Republic and wider European marketplace.

There are some issues with the Protocol and manufacturers here, though.

“Businesses would like the NI Protocol to have a lighter touch,” Stephen says. “More simplified, taking out some of the nonsense around capturing customer data for things which don’t have impact or risk the EU market.”

But he says the description of challenges aired by some political representatives is “hugely damaging to economy”. “It isn’t reflected in what businesses see,” he says.

The latest survey from Manufacturing NI shows two-thirds of companies here say are in growth mode. However, it also shows almost half are expecting a fall in profit margins over the coming year.

It showed firms are expecting to see increasing exports to EU markets (39%), with 40% expected to expand UK sales also.

It says that “while GB suppliers’ unpreparedness and unwillingness to adopt the new Brexit regulations remain a significant barrier to trading, the top four most prevalent concerns include rising energy costs, cost of doing business, availability of raw materials and the recruitment of skilled workers”.

Around a third of firms believe their GB suppliers remain unprepared for the new requirements.

“There is no doubt about it when it comes to cost, and the supply chain from GB,” Stephen says. “We continue to have GB suppliers unwilling to send stuff to NI. That is the single biggest challenge – an unwillingness to engage.

“There’s the admin which adds to the cost. My estimate is £175m to 195m for the industry as a whole. That’s based on the cost to get third party people to do the customs work.

“But you don’t have any in the EU supply chain. For us, it is about radically transforming the volume of administration required to free up the GB supply chain.

“Fundamentally, it makes Northern Ireland look confused, legally – (we need) an effort to get GB suppliers to make it easier to supply to NI.

“But if that’s done in a chaotic way, which is what the UK Government is signalling, all those GB suppliers won’t start sending things the next day. All those suppliers who have done this would have wasted all the time and effort and money (pivoting and making changes).”

The manufacturing sector, like the bulk of Northern Ireland’s business community and civic society, is firmly behind the immediate creation of a new Executive, and a return to power-sharing.

“It should have been formed the week after the election,” Stephen says. “There are so many challenges which can only be sorted with local politicians making local decisions. There is money on the table that needs to go to families and businesses.

“We have issues such as a (lack of) a three-year budget, our health service and waiting lists – those people are our workers and our family members.

“We need this sorted. We are going to go backwards pretty quickly.

“I’ve heard from a couple of people that they are embarrassed by a lack of government. They have to reassure suppliers and customers that things are going on in Northern Ireland, and that it is still a good place to invest.

“If you are investing tens or hundreds of millions, you want to know that money is safe. This negative news travels and makes its way to boardrooms across the world.”

It comes as Trade NI, an alliance of Manufacturing NI, Retail NI and Hospitality Ulster, took their message to Westminster at the end of May – showcasing the best we have to offer, and bringing together politicians and representatives from around 50 embassies.

“It’s about showcasing the breadth and vibrancy that is NI as a place to invest,” Stephen says.

“We also have around 50 embassies that are based in London that don’t know much about NI, about what a great place it is. There were MPs and Lords invited, some known to us and some who wanted to know a bit more and learn about Northern Ireland. It’s a positive pitch for NI as a place to invest and enjoy.”